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New Zealand – signs of domestic revival

While commodity prices, agricultural and Milk is weighing on New Zealand's economic outlook and its currency, domestic economy is showing recovery led by consumers.

  • As per latest data from Reserve bank of New Zealand (RBNZ), credit card spending rose by 10.5% in August, fastest pace since May, 2006. This is no individual outlier, given the fact that credit card spending rose at similar pace in July at 9.7%, which was fastest pace since Janaury 2008.

New Zealand's economy is commodity driven but agricultural and dairy, for which demand is likely to revive much faster than that of coal, iron ore or Copper.

Moreover Reserve Bank of New Zealand has started pursuing one of the most aggressive monetary policy in its recent history and it still very dovish and likely to cut rates further.

Despite improvement, outlook for New Zealand Dollar is still on the downside as RBNZ is expected to cut rates further. This month RBNZ has reduced rates for third consecutive times to 2.75%.

New Zealand Dollar is currently trading at 0.636 against Dollar.

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